Chapter 15 Book set

Question 1

The party on whom duress is exerted can choose to carry out the contract.

Answer 1

True

Question 2

Persuasion that induces a person to act according to the will of a dominant party is undue influence

Answer 2

True

Question 3

Exaggeration is an element of fraud.

Answer 3

False

Question 4

Generally, a contract will be set aside because certain pertinent information is not volunteered.

Answer 4

False

Question 5

The first element of proving fraud is to show that the innocent party is not easily fooled.

Answer 5

False

Question 6

Only a mistake of value or quality makes a contract voidable.

Answer 6

False

Question 7

If a mistake concerns the quality of the object of the contract, the mistake is one of fact.

Answer 7

False

Question 8

If a contractor’s bid was significantly low because he or she made a mistake in adding up the total estimated costs, any contract resulting from the bid is still normally enforceable.

Answer 8

False

Question 9

The presence of fraud does not affect the authenticity of the innocent party’s consent to a contract.

Answer 9

False

Question 10

Fra enters into a contract with Global Shipping Ltd. to insure and ship a painting from Holland to the United States for a certain price. Global makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

Answer 10

allow the parties to rescind the contract.

Question 11

Orin, an employee of Plumbing LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Built Inc. is seeking bids. Consequently, Plumbing’s bid is significantly low. Any contract with Quality Built that includes the mistake may be rescinded

Answer 11

if Quality Built knew or should have known of the mistake.

Question 12

Misrepresentation of law does not ordinarily entitle a party to avoid a contract.

Answer 12

True

Question 13

Big Dig LLC makes an offer to perform an excavation and related tasks for Commercial Development Corporation, but due to a substantial mathematical mistake, significantly underprices the work. Commercial accepts the offer. Data Big’s best defense against enforcement of the contract is that Commercial knew

Answer 13

the price was below the prices of comparable services

Question 14

Because value is variable, mistakes of value affect the enforceability of contracts.

Answer 14

False

Question 15

Mary owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respectively. Neil enters into a contract to buy “Mary’s ATV” for $750. Mary believes, in good faith, that she is selling the $500 ATV. Neil believes, in good faith, that he is buying the $1,000 ATV. In this situation

Answer 15

the contract is not enforceable.

Question 16

A contract that includes a bilateral mistake may be rescinded if the mistake involves

Answer 16

a material fact

Question 17

A fact that is important and central to the subject matter of a contract is a material fact.

Answer 17

True

Question 18

An innocent party who does not suffer harm as a result of a misrepresentation can nevertheless collect damages.

Answer 18

False

Question 19

Because of the potential for punitive damages, plaintiffs often include a claim for fraudulent misrepresentation in their contract disputes.

Answer 19

True

Question 20

In the context of fraudulent misrepresentation, an opinion is objective and verifiable, whereas a fact is subject to debate.

Answer 20

False

Question 21

Analytics LLC processes misinterpreted data furnished by Botch Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of

Answer 21

a bilateral mistake

Question 22

Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In e-mail, however, the firm’s sales representative mistakenly offers to sell the beef to Steak House for $1,000, Steak’s manager immediately accepts. The seller

Answer 22

is bound to the deal at the offered price

Question 23

Ordinarily, every party to a contract has a duty to come forward and disclose facts.

Answer 23

False

Question 24

Carlos and David contract for the sale of five hundred head of Carlos’s cattle for $195 per head. Unknown to either party, an unforeseen storm has struck the herd and many of the cattle have died. David is

Answer 24

not required to pay due to the bilateral mistake

Question 25

Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would

Answer 25

not rescind the contract.

Question 26

The essential feature of undue influence is that a party being taken advantage of suffers from a mental or physical impairment.

Answer 26

False

Question 27

Forcing a party to enter into a contract under the fear of threats constitutes undue influence.

Answer 27

False

Question 28

A party who can show that he or she did not genuinely agree to the terms of a contract has a defense against its enforcement.

Answer 28

True

Question 29

Data Inc. offers to provide certain services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer. Enterprise’s best argument in favor of enforcement of the contract is

Answer 29

a unilateral mistake does not afford relief from a contract

Question 30

Even if the defects on a piece of property are obvious, the buyer can justifiably rely on the seller’s misrepresentations concerning those defects.

Answer 30

False

Question 31

In general, a person should not rely on a non-lawyer’s statement about a point of law.

Answer 31

True

Question 32

Consent to the terms of a contract is voluntary even if one of the parties is forced into the agreement.

Answer 32

False

Question 33

Each party to a contract assumes the risk that the value of the object of the deal will change in the future.

Answer 33

True

Question 34

An otherwise valid contract is enforceable even if the parties have not genuinely agreed to its terms.

Answer 34

False

Question 35

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover

Answer 35

nothing

Question 36

One type of bilateral mistake can occur when a word or term in a contract is subject to more than one reasonable interpretation.

Answer 36

True

Question 37

Undue influence can arise from a confidential relationship or a relationship based on trust.

Answer 37

True

Question 38

A bilateral mistake occurs if one party to a contract is mistaken about a material fact and the other party knew or should have known that a mistake was made.

Answer 38

False

Question 39

For purposes of fraudulent misrepresentation, scienter clearly exists if a party asserting a fact knows it is not as stated.

Answer 39

True

Question 40

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

Answer 40

still liable on the bid

Question 41

The party on whom duress is exerted can choose to avoid the entire transaction.

Answer 41

True

Question 42

A misunderstanding concerning a basic assumption on which a contract is made will support the rescission of the deal if the mistake is

Answer 42

bilateral

Question 43

Voluntary consent to a contract is not lacking if one of the parties is mistaken about an important fact concerning the subject matter of the bargain.

Answer 43

False

Question 44

The distinction between “seller’s talk” and facts allows sellers to tout their products and services, thereby creating potential liability for fraud.

Answer 44

False

Question 45

Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

Answer 45

False

Question 46

If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, the contract is void.

Answer 46

False

Question 47

Generally, a unilateral mistake does not give the mistaken party any right to relief from the contract.

Answer 47

True

Question 48

County Title Company processes information furnished by others to transfer title to real estate from Dali to Ezra. The furnished information is mistaken. The contract between Dali and Ezra may be rescinded because the mistake

Answer 48

may be rescinded because the mistake is about a material fact.

Question 49

Ray, an employee of Shipping Company, makes a substantial mathematical mistake in totaling estimated transportation costs for Tonnage Inc., which is seeking bids. Consequently, Shipping’s bid is substantially low. Any contract with Tonnage that includes the mistake may be rescinded

Answer 49

if the mistake was made inadvertently and without gross negligence.

Question 50

When both parties to a contract are mistaken about the same material fact, a unilateral mistake has occurred.

Answer 50

False